Acquisition of DAB by BNP Paribas
BNP Paribas (rated A+/S-1 by Scope) announced last week the acquisition of 81.39% of DAB Bank, one the leading German players in the online-securities-related sector. DAB is well-known for its expertise with private clients, but in our view the main added value of the company for BNP Paribas is DAB’s B2B offer to Independent Financial Advisers (IFAs). DAB operates in Germany and Austria, where it has 567,000 and 67,000 clients respectively. They will complement Cortal Consors’ 790,000 existing clients in Germany. The acquisition gives a strong boost to BNP Paribas’s development in digital banking and brokerage in Germany, as the bank’s new number of clients post-acquisition in this country will stand at 1.4m, with total assets under management of EUR 58bn. We note that DAB Bank is valued EUR 435m (for 100% of the company). This represents 0.5% of BNP Paribas’ shareholders equity as of 30 June 2014. As of 31 March 2014, DAB Bank reported total assets of EUR 5.4bn and shareholders’ equity of EUR 255m.

Extension of partnership with Commerzbank in consumer finance until 2020
In its Q2 2014 presentation pack, BNP Paribas announced it had renewed its partnership with Commerzbank in consumer finance until 2020. Commerz Finanz, the joint venture between BNPP and Commerzbank (50.1% owned by BNP Paribas Personal Finance and 49.9% by Commerzbank) was created in 2010 to become the exclusive provider of consumer credit for Commerzbank (in the areas of personal loans and revolving credits).

Germany is key strategic priority for BNP Paribas
While presenting its development plan for 2016, BNP Paribas identified Germany as one of its five major strategic priorities. The bank decided to build an integrated bank there out of the twelve separate platforms that were previously in existence in the country. The bank is now represented in all its major business lines (retail banking, investment solutions & corporate and investment banking) and it aimed to access the retail deposit segment with the launch of Hello Bank! (113,000 clients in Germany at year-end in 2013). Hello Bank! Is the European digital mobile bank offer of BNP Paribas, launched in Belgium, Germany, France and Italy. The acquisition of DAB Bank enables BNP Paribas to make a quantum leap in its access of the German retail market as DAB’s total deposits reached EUR 5bn at the end of Q1 2014.

Strengthening retail franchise in Germany is positive for BNP Paribas
Scope considers BNP Paribas’ strategic developments in Germany as positive. By focusing on high-value added, low-capital intensive businesses, and by privileging a “branch-light” development in retail (through Hello Bank!, Cortal Consors and now DAB Bank) or through partnership with a large brick-and-mortar network (Commerzbank), the French bank can progressively build up its position in Europe’s largest economy without committing too many resources in a market that has traditionally been difficult for foreign banks. From revenues in Germany of EUR 1.2bn in 2013, BNP Paribas aims at reaching EUR 1.5bn by 2016. We note that the acquisition of DAB Bank goes a long way in helping BNP Paribas getting there, as DAB Bank reported EUR 130m of revenues in 2013.
Scope’s long- and short-term ratings for BNP Paribas are A+ with negative outlook and S-1 with stable outlook.